Buying on Hire Purchase

Contract: a legal agreement. Credit: when you are lent money and given time to pay it back, or when you buy goods or services and are given time to pay for them. Finance company: a company that lends the money to pay for the goods you buy on credit. Goods: things you buy eg, cars, stereos, carpet. Security interest: an interest (in the goods) held by the finance company enabling it to seize the goods if you default under the agreement. Seller: the shop or the dealer that supplied the goods. 3 What is hire purchase? What is hire purchase? singapore hire purchase Hire purchase is buying on credit, without paying the full amount straight away. It is often used to buy household appliances, furniture and cars. You take the goods home and pay for them over time but the finance company has a security interest in them until you have made the final payment.

Remember also that you’ll pay more interest with PCP, as you’re paying the balance off more slowly than with HP. Can I cancel a Hire Purchase contract? You can walk away early and hand the vehicle back with Hire Purchase but you’ll be left with no car to show for your payments. Depending on the value of the car at the time, and the amount that you have repaid, you may need to make an additional payment, as for much of the contract – especially at the start – the car is worth less than the remaining debt. There is an option called Voluntary Termination, set out in the 1974 Consumer Credit Act, which allows you to return the car without additional cost once you have made half of your payments. Half in this case means half of the total amount payable – that’s half of the total of the deposit and monthly payments.

They may have to break in, but they should do as little damage as possible. They must not leave your house obviously open when they leave. The agent can enter your property between 6 am and 9 pm, Monday to Saturday only. They cannot come on Sundays or on public holidays. But they can come during these times if, after you get behind in your payments, you sign something agreeing for them to come at one of these times. Repossession Do I have to pay repossession costs? You agreed to pay these costs when you signed the hire purchase contract. If you think you have been charged an unreasonable amount: ask the finance company to explain the charges check out how much other places charge go to the Disputes Tribunal. 18 Repossession 3 Post-possession notice is sent The finance company must send you a notice within 21 days of taking possession of the goods. This notice must state: the date of repossession repossession costs what you need to do if you want to reinstate or settle the agreement.

When the contract has finished, you decide if you’re going to pay the ‘option to purchase’ fee to own the car or return it to the car dealer. More commonly, people tend to get HP with the purpose of buying it at the end. If you wanted to buy a car that had a ticket price of £14,000, you would pay a deposit of £1,400. That means you’d have £12,600 left to pay over the course of the term – for this example, the contract will run for three years. If the deal had an APR of 5%, the monthly instalments would work out at around £380 each – resulting in a total of £13,608 over the three-year term. When the term ends, you can own the car by paying the ‘option to purchase’ fee of £200. Overall, you would have paid £15,208 for the car. Once all payments have been made, it belongs to you.

Under the Credit (Repossession) Act, six steps must be followed. 1 Pre-possession notice is sent The finance company must send you a prepossession notice. It must tell you: the amount you owe (the arrears) that you have 15 days from the day the notice was sent to pay the arrears. The finance company will usually post this notice to your last known address. If you have moved house and not told the finance company, in writing, of your new address, you may not receive this notice. This is your fault. The finance company has done all it is required to do by sending the notice. The finance company does not have to send the notice or wait 15 days if they have a good reason to believe that the goods are at risk eg, if they hear from another car dealer that you have tried to trade in your car which is on hire purchase. 16 Repossession 2 Goods are repossessed If you do not pay the amount owing within the 15 days, the finance company can repossess the goods, usually through a repossession agent.

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